(Kitco News) – Gold is teetering on the brink of a far more significant breakdown, and if the U.S. dollar’s recent rally goes much higher, the yellow metal could lose an additional $400 to $500 before the next meaningful support kicks in, according to Jesse Colombo, independent precious metals analyst and founder of the BubbleBubble Report.
Colombo said that dollar strength and rising interest rates are driving gold’s current weakness, along with liquidations due to the tech sell-off.
“It's still at that major support that's roughly $3,900 in COMEX futures,” he said. “I know it's slightly below there, but in order to feel more confident that this was a true breakdown, I would want to see it break with a higher margin, and it still hasn't done that.”
“It also did something similar right before the midterm, where it went right below, started triggering some stops, and then bounced again, so that's what I'm watching right now,” he added. “It hasn't been a clear breakdown yet.”
Colombo said the current support zone is not arbitrary. “It's what has really acted as a support since one year ago, going back to the October, November [2025] lows,” he said. “And then if you draw a zone across horizontally, you can see it touched it briefly when it sold off intraday in March at the worst of the sell-off. Then it did the same thing back in June and July, hit that same support and bounced off of it. And now it's retesting.”
“Is it down from here, or is it not? We're really on the cusp here.”
Colombo said that if the support zone around $3,900 per ounce does fail, he expects gold prices will fall at least $400.
“There's an air pocket from here down to around $3,400, $3,500,” he said. “So if it does indeed break, with a high enough margin, then I would expect it to head down to that next level of around $3,500.”
Going forward, Colombo pointed to the rise in the dollar as a major factor.
“The dollar, when it does this it acts like a wrecking ball to precious metals,” he said. “And [the dollar index] just broke out above 102, 103. So right now, the momentum is to the upside in the dollar. Until I see that dollar rally start to top out, I'm reluctant to call a bottom. And there is a chance gold could break below $3,900 if the dollar does keep on rallying strongly like this.”
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